Dublin Economic Monitor

Economic Monitor issue 11 october 2017 In this issue LATEST DUBLIN ECONOMIC DATA IHS MARKIT DUBLIN PMI KBC/ESRI CONSUMER SENTIMENT RISING ECONOMIC ACTIVITY DRIVES IMPROVEMENTS IN DUBLIN S LABOUR MARKET F E A T PAGE 12 BENCHMARKING DUBLIN'S COMPETITIVENESS By Bryan Coughlan, Policy Analyst, Fingal County Council. U R I N G

WELCOME HIGHLIGHTS 's unemployment rate dipped to a 9-year low of 6.1% in Q2 2017. Residential rents in returned to strong levels of growth in Q2 2017 as average rents reached new peaks. Residential property prices rose to a 9-year high with YoY growth rates exceeding 11% in both June and July. Public transport trips continued to grow strongly to reach a new peak of over 52 million passenger journeys in Q2 2017. Passenger arrivals at Airport maintained upward momentum in Q2 2017 on the back of greater connectivity to other international destinations. Housing completions in increased to over 5 in May 2017 and will be expected to rise further on the back of greater levels of housing commencements. The MARKIT PMI PMI data showed sustained expansions in business activity in Q3 2017, led mainly by the construction sector. KBC/ESRI Consumer sentiment in climbed in Q3 2017, driven by positivity around the economy and rising expectations regarding employment prospects and the future economic situation. welcome to the october 2017 issue of the dublin economic monitor The Economic Monitor is a joint initiative on behalf of the four Local Authorities, co-ordinated by the City Council. The Region (four local authorities combined) plays an increasingly important role in the economy of Ireland and it is important that its performance is properly tracked. The Monitor is designed to be of particular interest to those living and doing business in or considering locating here. It is produced by DKM Economic Consultants, with KBC/ ESRI delivering the consumer sentiment data and IHS MARKIT delivering the Purchasing Managers Index (PMI). Successive iterations of the Monitor have presented a summary of various published rankings of s performance in a comparative international context (page 9) and this quarter shows a broadly positive movement in our international reputation. In this edition we delve a little deeper to take a look at some of the economic factors driving this performance. Fingal s Bryan Coughlan assesses s competitiveness across a range of metrics and comparator cities (page 12). You can sign up to our quarterly mailing list and access the Monitor online at www.dublineconomy.ie. We hope you find the Monitor useful and welcome any feedback to info@leo.dublincity.ie. The next release will be published online on 25th January 2018. Interactive charts from the Monitor are available on the dashboard www.dublindashboard.ie. image: balbriggan harbour fingal county council City Council South County Council Fingal County Council Dún Laoghaire Rathdown County Council This document provides general information on the economy. It is not intended to be used as a basis for any particular course of action or as a substitute for financial advice. The document is produced independently by DKM Economic Consultants; the views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of the Local Authorities. The Local Authorities disclaim all liability in connection with any action that may be taken in reliance of this document, and for any error, deficiency, flaw or omission contained in it. 2 //

GLOBAL ECONOMY The global economy strengthened over the first half of 2017, driven by improved investment, trade and industrial production. Growth of 3.6% is expected for this year as rising domestic demand in advanced economies and China is supported by improved performances in developing economies. The Eurozone and emerging European countries have experienced higher than expected growth in early 2017 and this is a most positive development from an Irish perspective, particularly in light of Brexit. Accommodative monetary conditions have supported the recovery in the Eurozone along with improved global trade patterns, though low inflation is a persistent issue. Supportive monetary conditions are also seen as important to the performance of the US economy which is forecasted to grow by 2.2% in 2017. The domestic demand factors of investment and private consumption are expected to be to the fore, but a deepening ECONOMY NATIONAL ECONOMY Budget 2018 has dominated the Irish economic landscape in recent weeks and yet did not ultimately produce any seismic policy shifts. The Government introduced marginal reductions in income taxation and increases in health, social welfare and capital expenditure which consumed the majority of the available fiscal space of approximately 1.2 billion. Revenue measures to fund these expansions primarily came from a threefold increase in commercial stamp duty from 2% to 6%, along with a range of other measures including reduced mortgage interest relief. The Budget was based on economic forecasts which estimated that Irish GDP would grow by over 4% in 2017, before slowing to 3.5% in 2018. This would suggest that the Irish economic recovery is now in a mature phase with growth rates in private consumption, government expenditure and exports slowing following a number of years of exceptional growth. euro: sterling exchange rate 1.35 total voted government expenditure & growth patterns 2013-2018f 62 20% 1.30 60 15% 1.25 1.20 1.15 Conservative Party Conference General Election Result Gross Total Expenditure ( bn) 58 56 54 52 10% 5% 0% -5% YoY Expenditure Growth (%) 1.10 Brexit Referendum Result Article 50 Triggered 50-10% 1.05 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 48-15% 2013 2014 2015 2016 2017E 2018F Gross Total Expenditure - Left Axis Current Expenditure Growth - Right Axis source: central bank of ireland. Capital Expenditure Growth - Right Axis source: department of public expenditure & reform, budget 2018. lack of clarity over fiscal policies from the Trump administration is a cause of considerable uncertainty. The UK s economy is the notable black spot in an Irish context, with economic growth forecasted to reach a weaker than expected level of 1.7% in 2017. Softening private consumption is a decisive factor, and this has resulted from rising inflation driven by the depreciation of the pound (see chart). Uncertainty surrounding the UK s future trade, migration and financial services arrangements are also considered to be weights on the country s potential economic growth in the medium term as Brexit negotiations continue. major economies gdp growth forecasts 2016 % 2017 % f 2018 % f global 3.2 3.6 3.7 uk 1.8 1.7 1.5 us 1.5 2.2 2.3 euro area 1.8 2.1 1.9 germany 1.9 2.0 1.8 japan 1.0 1.5 0.7 china 6.7 6.8 6.5 india 7.1 6.7 7.4 source: imf, october 2017. The National Accounts for Q2 2017 were in line with these forecasts, and showed that the Irish economy continued to grow at robust rates in the first half of the year. Personal consumption, although down QoQ as a result of a reported fall off in second-hand car purchases, did increase by 1.7% YoY in Q2 2017 and was supported by a 2.1% YoY increase in Government spending. An improvement in net exports was also recorded, and these factors more than offset a decrease in investment (-8.8% YoY) which has been significantly affected by movements of Intellectual Property into Ireland in recent years. irish macroeconomic growth forecasts 2016 % 2017 % f 2018 % f gnp 9.6 0.0 3.3 gdp 5.1 4.3 3.5 private consumption 3.3 2.3 2.3 public expenditure 5.3 2.0 2.0 investment 61.2-3.7 6.1 exports 4.6 3.5 4.8 imports 16.4-1.0 5.5 unemployment rate 7.9 6.3 5.7 cpi inflation* 0.0 1.1 1.4 debt:gdp ratio** 72.8 70.1 69.0 source: department of finance, budget 2018 *source: esri qec autumn 2017. **general government balance // 3

DUBLIN ECONOMY RISING ECONOMIC ACTIVITY DRIVES IMPROVEMENTS IN DUBLIN S LABOUR MARKET construction sector rebound central to expansions in business activity & employment The unemployment rate continued on a downward trajectory in Q2 2017 to reach a nine-year low of 6.1%. This was 1.4 percentage points (pp) below the same quarter in 2016 and underlined the significant ongoing progress which is being made in job creation across the capital. Unsurprisingly, the construction sector has led employment growth in in recent quarters, with high levels of office construction and rising house building levels feeding through to employment. The sector now employs over 36,000 workers which is roughly midway between the extremes of the trough in 2013 (17,800) and the peak in 2008 (59,700). In a related context to the improving labour market, demand for office space remains very high in the capital. According to CBRE, the office vacancy rate stood at 6.2% in Q3 2017 while average rents remained at peak levels. Of great significance is the Grade A office vacancy rate of 2.6% in 2/4 which is extremely low, and could prove problematic for high-end firms looking to expand or establish in the city. However, it will be expected that the high levels of office construction occurring in 2/4 at present will at least partially offset this low vacancy rate in the medium term. s public transport system continues to show strong levels of growth with over 52 million passengers using the service in Q2 2017. This was a new peak in the series and represented a YoY increase of 2.6 million trips or 5.3%. Passenger trips on the Luas in particular are expected to increase by up to 10 million per annum from December 2017 onwards with the opening of the Luas Cross City which will link Broombridge and St. Stephen s Green, completing a project which was commenced in 2013. Such passenger growth would represent close to a 30% increase on the total passenger journeys recorded on the Luas in 2016 (34.2 million). The project, which will cost an estimated 368 million, will also connect the heretofore separate Green and Red Luas lines. Throughput volumes at Port have continued to climb in recent quarters in spite of international uncertainty and the depreciation of sterling. The Port handled over nine million tonnes of throughput for the first time in Q2 2017, with strong QoQ import growth (which is likely linked to the weakness of sterling) supported by a more modest expansion in exports. Positive trends in the labour market are cited as key drivers to further increases in consumer sentiment levels in Q3 2017, according to KBC/ESRI. Austin Hughes, Chief Economist at KBC Bank Ireland, notes: consumer sentiment saw a strong improvement as the persistence of healthy trends in activity and employment eased earlier fears of a sharp Brexit related slowdown. This increased confidence was also reflected in a marked upgrade of the buying climate by consumers that should help underpin consumer spending in the capital. s IHS Markit Purchasing Managers Index (PMI) for Q3 2017 also showed positive signs with business activity continuing to expand at a robust pace. Andrew Harker, Senior Economist at IHS Markit, explains: The private sector economy continued to grow strongly during the third quarter of 2017, supported by sharp rises in new work. There was a welcome pick-up in the rate of job creation following a slowdown in Q2, with firms increasingly willing to take on extra staff in line with higher workloads. The capital s economy, therefore, looks in good shape to end the year on a positive note. All three monitored sectors saw output expand, with the construction sector again the best performer. Growth outside of also remained strong in Q3, highlighting the broad-based nature of the current upturn. 4 //

DUBLIN ECONOMIC INDICATORS DUBLIN ECONOMIC INDICATORS moderate decline in unemployment in q2 2017 q2 '17 dublin unemployment (sa) 6.1% year on year change % points (sa) -1.4 dublin employment '000s (sa) 628.6 year on year change '000s (sa) +9.9 source: cso qnhs seasonally adjusted BY DKM.. 's seasonally adjusted unemployment rate declined by 0.3 percentage points (pp) QoQ in Q2 2017 to stand at a nine-year low of 6.1%. This was 1.4pp below the same quarter in 2016 and reflected improving labour market conditions in the capital where almost 10,000 jobs were created YoY. At the national level the unemployment rate has declined in each of the last six quarters to stand at 6.2% in Q2 2017. The small differential between the unemployment rates at the and national levels is a strong sign of a nationwide economic recovery. 16% 14% 12% 10% 8% 6% 4% 2% 0% dublin & national unemployment rate % (sa) Q2 08 Q1 09 Q4 09 Q2 11 Q1 12 Q4 12 Q2 14 National source: cso qnhs. dublin seasonally adjusted by dkm note: this series has been re-calibrated since the last issue' Q1 15 National Max 15.1% Max 13.1% Q4 15 Q2 17 employment continues to rise despite industrial sector lag q2 '17 services employment '000s (sa) 536.6 year on year change '000s (sa) +6.5 industry & constr, employment '000s (sa) 84.9 year on year change '000s (sa) +2.1 source: cso qnhs, seasonally adjusted BY DKM. 700 600 500 0 Max: 631,0 employment by broad sector '000s (sa) 621,0 Employment levels in rose at a modest rate in Q2 2017 with the construction sector driving growth on both a QoQ and YoY basis. Total employment increased at a seasonally adjusted rate of 1.5% YoY with the construction and public sectors recording the strongest growth rates at 21.7% and 3.6% YoY respectively. Industry recorded a YoY decline in employment levels but this was more than offset by the robust job creation in construction. Private sector services employment was broadly stable YoY. 300 200 100 0 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Q2 17 Private Sector Services Public Sector Industry Construction source: cso qnhs seasonally adjusted. note: individual sector values may not sum to total due to rounding. This series has been re-calibrated since the last issue // 5

DUBLIN ECONOMIC INDICATORS sharp acceleration in property price growth jul '17 property price index dublin 99.3 year on year % change +12.7 property price index national excl dublin 87.7 year on year % change +11.7 source: cso. note: this index includes both cash- and mortgage-based transactions. 1 130 120 110 100 90 80 residential property price index (2005 = 100) Max 126.2 Residential property price growth accelerated sharply in in Q2 2017 as limited new supply continued to affect the market. YoY growth rates increased in each month in the quarter and reached 12.7% in July. This drove the property price index to 99.3 which is the highest point since early 2009. Double- digit YoY growth rates have also been recorded outside of in each of the last nine months as property prices continue to recover across much of the country. 70 60 50 Mar 08 Nov 08 Jul 09 source: cso. Mar 10 Nov 10 Jul 11 Mar 12 Nov 12 Jul 13 Mar 14 Nov 14 Jul 15 National Excl Mar 16 Nov 16 Jul 17 residential rents reach new peaks q2 '17 dublin house rent per month 1,538 year on year change +39 dublin apartment rent per month 1,475 year on year change +94 source: rtb. Residential rents in climbed to new peaks in Q2 2017, and more than offset decreases in average rents which occurred in Q1 2017. The average monthly rent for a house rose by 2.6% YoY to stand at 1,538 in the quarter. Average monthly rents for apartments increased at an even sharper rate of 6.8% YoY to reach 1,475. Outside the capital, average monthly rents increased by over 7% YoY but remain substantially below the equivalent rents in. 1,650 1,550 1,450 1,350 1,250 1,150 1,050 950 850 750 650 550 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 House source: rtb. Q2 11 residential rents per month Q4 11 Q2 12 Apt House Max: 1,538 Apt Max: 1,475 Q4 12 Q2 13 Q4 13 Q2 14 National ex House Q4 14 Q2 15 Q4 15 Q2 16 National ex Apt Q4 16 Q2 17 housing supply shows signs of progress source: dhplg. seasonally adjusted by dkm. may '17 total house commencements (sa) 871 year on year change +466 total house completions (sa) 544 year on year change +99 The supply of units to 's housing market showed signs of significant progress in the second quarter of 2017 as both commencements and completions grew at strong rates. Housing commencements doubled YoY in each month between March and May with a seasonally adjusted combined total of over 2,500 units commencing. Completion levels grew at a a more modest rate with almost 1,0 houses (seasonally adjusted) being finished in the three-month period. This will be expected to rise further over the coming quarters as the increase in commencements feeds through to the market. dublin housing commencements & completions (sa) 2,000 1,800 1,600 1,0 1,200 1,000 800 600 0 200 0 May 07 Oct 07 Mar 08 Aug 08 Jan 09 Jun 09 Completions Max: 1,750 Commencements Max: 1,030 Nov 09 Apr 10 Sep 10 Feb 11 Jul 11 Completions Dec 11 May 12 Oct 12 Mar 13 Aug 13 Jan 14 Jun 14 Nov 14 Commencements source: dhplg. seasonally adjusted by dkm. note: series has been re-calibrated since the last issue. completions data has been adjusted to accommodate a 2014 change in the method of data collection Apr 15 Sep 15 Feb 16 Jul 16 Dec 16 May 17 6 //

DUBLIN ECONOMIC INDICATORS city centre office rents climb to new peak q3 '17 city centre office rent index 115.0 year on year % change +5.6 south suburbs office rent index 110.0 year on year % change 0.0 source: CBRE Office rents in were broadly stable in Q3 2017, with the notable exception of city centre where rents increased by 1.2% QoQ and 5.6% YoY to reach the highest point on the index (115) since the series began in 2006. Office rents were flat across the other areas of the capital, with take-up reported to be weak following a very strong first half of 2017. Of the take-up recorded across in Q3, financial services (36%) and high tech firms (20%) accounted for the majority of new tenancies. 120 110 100 90 80 70 60 50 Q3 07 Q1 08 Q3 08 Q1 09 source: cbre. dublin office rents index (2006 = 100) Q3 09 Q1 10 Q1 11 Q3 11 City Centre City Centre Max = 115 South Suburbs Max = 110 Q1 12 Q3 12 Q1 13 Q1 14 Q3 14 Q1 15 South Suburbs Q3 15 Q1 16 Q1 17 Q3 17 overall office vacancy rate falls in q3 2017 q3 '17 vacancy rate % dublin 2/4 5.6 year on year change % points +0.4 vacancy rate % dublin suburbs 8.0 year on year change % points -2.8 source: cbre. 30% 25% 20% 15% dublin office space vacancy rates % Suburbs Max = 25% 2/4 Max = 20.6% The overall office vacancy rate in fell to 6.2% in Q3 2017, down 0.3 percentage points (pp) on the previous quarter. The most sizeable reduction in vacancy was recorded in the suburbs where the vacancy rate reduced by 1.7pp QoQ and 2.8pp YoY to stand just below 8%. Vacancy rates rose by 0.5pp and 0.6pp QoQ in City Centre and 2/4 respectively to stand at 5.1% and 5.6% in Q3. 10% 5% 0% Q3 08 Q1 09 Q3 09 Q1 10 Q1 11 Q3 11 Q1 12 2/4 Q3 12 Q1 13 Q1 14 Q3 14 Q1 15 Suburbs Q3 15 Q1 16 Q1 17 Q3 17 source: cbre. passenger trips on public transport increase despite strike action q2 '17 public transport million trips (sa) 52.2 year on year change (sa) +2.6 source: nta seasonally adjusted by dkm. 54 52 50 public transport million trips (sa) 's public transport system recorded over 52 million passenger trips (seasonally adjusted) in the second quarter of 2017, despite strike action on Bus Eireann routes in April. This was the highest level recorded since the series began in 2010, and represented a substantial increase of 2.6 million trips or 5.3% YoY. Luas passenger trips will be expected to increase further from Q4 2017 onwards with the planned opening of the Luas Cross City connecting Broombridge and St. Stephen's Green in December. 48 46 44 42 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 source: nta. seasonally adjusted by dkm. note: this series has been re-calibrated since the last issue. Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 // 7

DUBLIN ECONOMIC INDICATORS dublin airport growth underpinned by gateway connectivity 1,250 dublin airport arrivals '000s (sa) Max: 1,235 jun '17 total arrivals '000s (SA) 1,197.5 year on year change '000s (sa) +72.8 1,150 1,050 source: cso, seasonally adjusted by dkm. Passenger arrivals at Airport remained close to 1.2 million (seasonally adjusted) in each month of Q2 2017, having reached a new peak of 1.23 million arrivals in March. YoY growth exceeded 4% in each month between April and June, continuing a sequence of consecutive months of YoY growth which stretches back to mid-2012. Airport has reported that one of the strongest drivers of growth this year has been passengers choosing the airport as a gateway to connect onwards to other international destinations. 950 850 750 650 550 Apr 08 Sep 08 Feb 09 Jul 09 Dec 09 Severe Winter Weather Icelandic Ash Cloud May 10 Oct 10 Mar 11 Aug 11 Jan 12 Jun 12 Nov 12 Apr 13 Sep 13 Feb 14 Jul 14 Dec 14 May 15 Oct 15 Mar 16 Aug 16 Jan 17 Jun 17 source: cso. seasonally adjusted by dkm. quarterly port throughput exceeds 9m tonnes for first time q2 '17 dublin port exports million tonnes (sa) 3.7 yoy change million tonnes (sa) +0.2 dublin port imports million tonnes (sa) 5.3 yoy change million tonnes (sa) +0.1 source: dublin port. seasonally adjusted by dkm. note: imports and exports may not add to total throughput due to seasonal adjustment and rounding. 9.5 9.0 8.5 8.0 7.5 7.0 dublin port tonnage million tonnes (sa) Max: 9 million tonnes Throughput at Port increased by 3.9% YoY in Q2 2017 to exceed nine million tonnes (seasonally adjusted) for the first time, more than offsetting a minor decline in Q1. Imports, which account for the majority of throughput at the port, were the main driver, while an expansion in export activity was also recorded. The continued strong performance of Port is a major positive for the economy, especially in light of international uncertainty around Brexit. 6.5 6.0 5.5 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Min: 6.4 million tonnes Q4 10 Q2 11 source: dublin port. seasonally adjusted by dkm. note: this series has been re-calibrated since the last issue Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 hotel room rates and occupancy remain high sept '17 hotel occupancy rate % (sa) 82.4% year on year change %age point -0.4 index of hotel room supply (sa, 2011=100) 101.0 year on year change % -0.2% source: str. seasonally adjusted by dkm. 150 1 130 120 dublin hotel average daily rates (sa) Maximum: 139 Average Daily Rates (ADRs) for hotel rooms in continued to rise in Q3 2017 to stand at 139 (seasonally adjusted) in September. This was 8% or 10 above the equivalent ADR in September 2016. Market supply has been largely static across 2017 with few new hotel rooms coming on stream. Occupancy reached 82.4% in September 2017 and has also been largely stable across the year. Significant new supply is planned for the coming years in the capital and this will be expected to dampen occupancy rates long-term. 110 100 90 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 source: str. seasonally adjusted by dkm. May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17 Jul 17 Sep 17 8 //

DUBLIN S INTERNATIONAL RANKINGS BROADLY POSITIVE MOVEMENTS IN DUBLIN S INTERNATIONAL REPUTATION Internationally published benchmarks are a useful means of measuring a city s performance relative to its peers, and recent indicators for confirm the city s strong showing across a range of dimensions (see table below). The benchmarks listed focus on a number of areas attractiveness for FDI, the real estate market, quality and cost of living, business environment, university quality, start-up environment and tourism. The Knight Frank Global Cities Report ranked at 13th out of 19 worldwide cities in terms of expense for businesses employing staff. The capital was ranked favourably compared to London but fell short of Frankfurt and Amsterdam with estimated annual wage and rental costs of 3.4 million per 100 staff. Declan O Reilly, Director of Knight Frank in, highlighted how flexibility is vital to companies taking up office space in, particularly in the tech sector: We are seeing the traditional 25- year institutional lease of old giving way to more flexible terms of shorter duration. The drive for flexibility is also influencing occupier fit-out habits, with activity-based working and co-working culture set to take-off in a significant way. Lastly, tech employees are seeking the flexibility allowed by living close to work, which is driving demand for city centre apartment living. The 2018 Global Financial Centres Index also reflected s strengthening global competitiveness as the capital moved up three places to 30th, and was named as one of 15 worldwide centres likely to become more significant. In education, PitchBook maintained Trinity College s ranking as Europe s leading university for producing venture capital-backed entrepreneurs from its undergraduate programmes. 216 alumni had successfully raised almost $2.4 billion in capital between 2006 and 2017, ensuring the university s position at 48th in the world. The capital s reputation as a host for conferences was improved in 2017 according to the International Congresses and Conventions Association. ranked as the 13th most popular destination worldwide having hosted 118 international conferences in 2016. This represented an improvement of five places YoY. Although performed strongly in many rankings, house price growth in was the 36th highest in the world in the 12 months to Q2 2017 according to Knight Frank. Price growth was weaker than in Toronto and Amsterdam but stronger than in the likes of New York and London, and this is an issue which is likely to have implications for the city s competitiveness. dublin's latest international rankings SOURCE BENCHMARK CRITERIA YEAR RANKING CHANGE FDI Intelligence Global Cities of the Future Socio-economic 2017 3 - Global Financial Centres Index (GFCI) Business environment, financial sector development, infrastructure, human capital, reputational & general factors; online survey * tcd. change on previous publication of the relevant benchmark. an upward-pointing arrow denotes an improvement. 2017 30 Knight Frank Global Cities Report Cost to businesses of employing 100 people 2017 13 - PwC Emerging Trends in Real Estate Europe 2017 Real estate investment, development 2017 4 Knight Frank Global Residential Cities Index House price growth 2017 36 IMD World Competitiveness Yearbook Rankings (Ireland) Economic performance, government efficiency, business efficiency & infrastructure 2016 7 Mercer 2017 Cost of Living Survey Cost of consumer goods and services 2017 66 Mercer 2017 Quality of Living Survey Environmental/socio-economic 2017 34 QS World University Rankings University quality 2017 88* PitchBook Top Universities for Venture Capital-backed entrepreneurs CBRE European Tech Ranking International Congresses and Conventions Association (ICCA) World Rankings City Reptrak Study Origin of companies which received a first round of venture capital Tech clusters employment, growth and attractiveness credentials 2017 48* - 2016 6 - International association conferences hosted 2017 13 Reputation as a destination to visit, work, live and invest 2016 20 // 9

KBC / ESRI CONSUMER SENTIMENT INDEX substantial improvement in dublin consumer confidence 180 Base 2003 = 100 sentiment overall consumer sentiment dublin National excl. dublin 160 q3 2017 159.1 159.0 year on year change +9.0 +4.8 quarter on quarter change +8.6 +1.7 1 120 The overall Consumer Sentiment Index increased by 8.6 index points QoQ in Q3 2017 reflecting an increased positivity around the economy and improved expectations regarding the future economic situation and employment prospects. This was 9.0 index points above the level observed in Q3 2016. The pace of growth outside was slower in the quarter due to diverging perceptions regarding the current financial environment and future personal finances. 100 80 60 Q3 08 Q1 09 Q3 09 Q1 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q1 17 Q3 17 National excl. perceptions of current conditions positive 130 Base 2003 = 100 current conditions current conditions dublin National excl. dublin 120 q3 2017 121.0 124.9 110 year on year change +5.8-2.1 quarter on quarter change +6.8-2.5 100 90 There was a further QoQ increase in the Index of Current Conditions of 6.8 index points in Q3 2017. The main driver was an improvement in the consumer sentiment particularly for large household purchases. There was also an increase in consumers reporting their personal financial situation had improved over the past year. This largely reflects improving domestic labour market conditions. 80 70 60 50 Q3 08 Q1 09 Q3 09 Q1 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q1 17 Q3 17 National excl. consumer expectations increase further 230 Base 2003 = 100 expectations consumer expectations dublin National excl. dublin q3 2017 200.5 191.5 year on year change +12.7 +11.3 quarter on quarter change +10.6 +5.6 210 190 170 150 consumers views on the Irish economy improved considerably in Q3 2017, with the expectations data suggesting that the fears concerning last year s UK referendum vote to leave the EU are somewhat dissipating. The continuing decline in the unemployment rate also appears to be feeding into more positive labour market prospects. Outside the Capital, overall expectations have increased but consumers are marginally more pessimistic about their future personal finances than in. 130 110 90 70 50 30 Q3 08 Q1 09 Q3 09 Q1 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q1 14 Q3 14 Q1 15 Q3 15 National excl. Q1 16 Q1 17 Q3 17 About The KBC/ESRI sentiment index is based on responses from consumers about general economic conditions and their household finances. A more detailed commentary is available at www.kbc.ie/blog 10 //

DUBLIN IHS MARKIT PMI dublin output increases sharply again in q3 65 50 = no change overall ihs markit pmi (sa) increasing rate of growth overall ihs markit pmi dublin national excl. dublin 60 q3 2017 57.9 58.3 55 year on year change -0.3 +0.6 quarter on quarter change -1.5 +0.9 50 45 The third quarter of 2017 saw a further sharp increase in private sector output in. The PMI registered 57.9, down from 59.4 in Q2 but still well above the 50 no-change mark. Growth was again led by construction, but higher output was also seen in manufacturing and services. 35 30 25 increasing rate of contraction Q3 01 Q3 02 Q3 03 Q3 04 Q3 05 Q3 06 Q3 07 Q3 08 Q3 09 Q3 11 Q3 12 Q3 14 Q3 15 Q3 17 National excl. further sharp rise in new orders overall pmi new orders (sa) 50 = no change increasing rate of growth 65 new orders dublin national excl. dublin 60 q3 2017 58.9 58.4 55 year on year change +0.5 +2.3 quarter on quarter change +0.1 +0.6 50 45 New orders by businesses in rose strongly in the third quarter of 2017, with the rate of expansion not changing significantly from Q2. New business has increased continuously since Q4 2012. The expansion of new orders in was slightly faster than in the rest of Ireland. 35 30 25 increasing rate of contraction Q3 01 Q3 02 Q3 03 Q3 04 Q3 05 Q3 06 Q3 07 Q3 08 Q3 09 Q3 11 Q3 12 Q3 14 Q3 15 Q3 17 National excl. job creation accelerates employment growth dublin national excl. dublin q2 2017 58.9 55.4 year on year change +0.8 +0.3 quarter on quarter change +4.1 0.0 Companies in continued to increase their staffing levels in Q3 2017. The rate of job creation was substantial, having picked up from the previous quarter. firms raised employment at a stronger pace than the rest of Ireland. overall pmi employment growth (sa) 50 = no change increasing rate of growth 65 60 55 50 45 35 30 25 increasing rate of contraction Q3 01 Q3 02 Q3 03 Q3 04 Q3 05 Q3 06 Q3 07 Q3 08 Q3 09 Q3 11 Q3 12 Q3 14 Q3 15 Q3 17 National excl. about The Purchasing Managers Index (PMI) series is produced by IHS Markit Economics, an independent research company that produces highly-regarded surveys of business conditions in nations around the world www.markit.com // 11

SPECIAL REPORT BENCHMARKING DUBLIN'S COMPETITIVENESS BY BRYAN COUGHLAN POLICY ANALYST, ECONOMIC, ENTERPRISE AND TOURISM DEVELOPMENT, FINGAL COUNTY COUNCIL Following a number of years of difficult economic conditions, the Irish and economies have recovered to rank amongst the most competitive in Europe. Business costs in the capital remain relatively low, while the labour market has improved and contributed to high levels of value added per capita. The challenge for policymakers is to ensure that this competitiveness is maintained through the uncertain times which lie ahead. an improving national picture After dropping to 24th place in the IMD Competitiveness rankings in 2011, Ireland climbed again to 6th position this year, our highest placing since 2001. As the capital city, comprising 45% of the national economy, s competitiveness warrants closer investigation within this overall picture. This article summarises some recent analysis by Fingal County Council which considers the region s competitiveness in a comparative international context. ireland's imd competitiveness ranking, 2000-2017 1 employment and productivity has experienced steady productivity growth over the past number of years. Of comparator cities included in this analysis, only two had higher gross value added per capita in 2016 and while a portion of this can be accounted for by issues affecting Ireland s GDP measurement, the divergence between Ireland s productivity growth and that of the EU has been evident from the late 1990s 1. Gross value added per capita in European cities (2016) 90,000 80,000 RANKING 6 11 16 21 EUROS ( ) 70,000 60,000 50,000,000 30,000 20,000 10,000 26 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 Frankfurt Amsterdam Brussells Stockholm London Milan Helsinki Vienna Rome Berlin Madrid Barcelona Lisbon Copenhagen source: cso. seasonally adjusted by dkm. source: cso. 12 //

change in unemployment rate 2011-2016 4 employment change 2011-2016 15 2 10 5 PERCENTAGE CHANGE 0-2 -4 PERCENTAGE CHANGE 0-5 -10-15 -6-20 -8 London Berlin Lisbon Copenhagen EU Frankfurt Madrid -25 source: Eurostat. source: oecd Employment in has increased by 13.4% between 2010 and 2017, equating to a net increase of 74,0 2 jobs, the strongest rate of employment growth across EU cities benchmarked here. has also had the largest reduction in unemployment. business costs While the range of business costs are typically higher in than elsewhere in Ireland, comparisons with international cityregions show more moderate results. has remained reasonably priced for office space. Compared to London, the cost of construction of office space is 41% more competitive and the construction of high-tech manufacturing premises is 27% cheaper 3. While data for is not available across all metrics, national indicators show a reasonable performance. To date, Irish wage growth has been largely contained despite tightening in the labour market. Average labour costs in Ireland compare favourably with major European economies and energy costs - such as natural gas and industrial electricity - are also competitively priced 4. Overall, producer price indices show that Ireland s business costs are broadly growing in line with those typical of EU countries. producer price index for industry and services, 2016 (2010 = 100) 120 Industry Services 100 INDEX PRICE 80 60 20 Switzerland Belgium Sweden Finland Netherlands Austria France Italy Brussels EU Stockholm Portugal Zürich Spain Amsterdam Luxembourg Paris Germany Milan UK Rome Ireland Vienna Denmark London Vienna Copenhagen Amsterdam Stockholm Frankfurt Paris Zürich EU Barcelona Lisbon Milan Brussells Berlin Rome Madrid source: Eurostat 1. eurostat data shows that irish productivity has increased by 131.3% between 1996 and 2016, compared to average eu growth of 29.5%. 2. cso quarterly national household survey q4 2010 q2 2017. 3. turner and townsend: international construction market survey 2016 4. eurostat data shows that labour cost per hour and income tax and social security contributions are lower in ireland than in many other european economies, including austria, germany, netherlands, france and belgium. industrial electricity is cheaper than the eu average in ireland, with natural gas marginally more expensive than the eu average. // 13

knowledge economy Turning first to national data, of those who have completed education, 48% have a third-level qualification. Further, a comparatively large portion of these qualifications are in high value-adding fields, such as science, technology, engineering and maths (STEM). This is reflected in the concentration of the workforce employed in high value-adding sectors of the economy, with 7.4% of people employed in ICT and 8.7% in the financial and insurance sector. Again, this is higher than most comparator city regions. The data bears out the strength and importance of particular sectors of the region s economy. IDA Ireland has highlighted our attractiveness for technology sector investment projects and has been to the fore in this regard. In addition to talent availability set out here, brings clear advantages in terms of our track record, connected technology infrastructure and vibrant start-up scene. Similarly, the data underlines strengths in financial services activity in. In the aftermath of Brexit, further investment in this sector is anticipated and this can assist in ameliorating negative impacts elsewhere in the region s economy. policy challenges While much of this analysis points to the ongoing strengths of as an investment location, close attention must be paid to challenges and pitfalls on the horizon. These include uncertainties in relation to Brexit, the need to address supply-side issues in the city s economy - principally housing continuing efforts to increase the level of innovation in the enterprise base in and guarding against the threat of wage inflation as the labour market tightens further. Policymakers must remain vigilant to these and other issues to ensure that the relative gains achieved over the past number of years are not eroded. proportion of stem graduates in the population aged 25-65 2.5 % 2.0 % 1.5 % 1.0 % 0.5 % 0.0 % 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % London Ireland source: cso. share of workforce employed in high value-adding sectors (2016) source: cso. Denmark Zürich Finland Paris United Kingdom Madrid Belgium Masters or above Stockholm Switzerland Copenhagen Norway Financial and insurance activities Frankfurt Netherlands France Lisbon Sweden Bachelors or above Berlin Portugal Amsterdam Germany Rome Region Spain Brussells Austria Milan Region Italy EU Information and communication Luxembourg Barcelona 14 //

ECONOMIC SCORECARD dublin: economic scorecard october 2017 Note: These "petrol gauge" charts present the performance of the particular indicator relative to a range of performances from most positive (green) to least positive (red). Each gauge presents the latest value compared to the peak value and the trough value over the last decade (except for public transport trips which cover the past 5 years). The Commercial Property gauges are red at the high and low extremes, in recognition of the undesirability of rents that are either too high or too low as well as vacancy rates. economy ihs markit business pmi q3 2017 unemployment rate q2 2017 kbc/esri consumer sentiment q3 2017 46 51 8 10 100 120 57 6 11 70 1 34 63 5 13 53 160 57.9 6.1 159 3 month moving average (sa) airport arrivals june 2017 % (sa) index (2003 = 100) (sa) transport seaport cargo q2 2017 public transport trips q2 2017 860 990 7.5 8.0 46.8 48.6 7 1,110 7.0 8.5 45.0 50.4 610 1,198 1,235 6.4 9.0 9 43.2 52.2 000's/month (sa) average residential rents q2 2017 million tonnes/quarter (sa) residential property residential property price index july 2017 million trips/quarter (sa) housing completions may 2017 1,160 1,260 86 102 700 1,100 1,070 1,350 70 118 0 1,0 973 1,451 1,451 55 134 61 99.3 544 1,750 /month index 2005 = 100 units/month (sa) commercial property dublin city centre office rent q3 2017 dublin 2/4 office vacancy rate q3 2017 dublin suburbs office vacancy rate q3 2017 450 520 15 20 15 18 370 600 10 25 11 22 296 681 5 5.6 30 8.0 25 /sq.m. % % sources: cso, except consumer sentiment kbc/esri; ihs markit; seaport cargo dublin port; public transport nta; residential rents rtb; commercial property cbre research // 15